Daily Mail, London, market report column
Oct 06, 2012 (Menafn - Daily Mail - McClatchy-Tribune Information Services via COMTEX) --IMPERIAL Tobacco was the Footsie stock with a licence to thrill yesterday.
Shares of the Lambert & Butler and Golden Virginia cigarette group were chased up to 2385p before closing 27p higher at 2370p on hefty turnover of 51m shares amid revived rumours of a break-up bid from Japan Tobacco, which controls well over 60pc of the fags market in Japan.
Imps traded above pounds sterling 25 earlier this year on the same story with punters at the time responding to speculation that the Japanese giant is on the trail of further acquisitions after its purchase of Gallaher in 2007. There were even suggestions then that Dunhill rival British American Tobacco (9.5p better at 3309.5p) could join forces with Japan Tobacco to break Imps up. Imps were recently sold down to 2250p as speculation intensified that France would soon introduce damaging government legislation that cigarettes will have to be sold in drab olive packets with graphic health warnings and no logos. It follows the industry's recent failure to overturn an Australian law, due to come into effect on December 1, forcing companies to remove virtually all branding from cigarette packets.
A surprising fall in the US unemployment rate to 7.8pc in September, the first time it has dipped below 8pc in nearly four years, together with expected news that non-farm payrolls added 114,000 jobs, helped world stockmarkets end the week on a firm note.
The Footsie closed 43.24 points higher at 5,871, while the FTSE 250 advanced 106.93 points to 12,061.35. Wall Street advanced 57 points in early trading to a level last seen in December 2007.
Equity strategists believe it all augurs well for the fourth quarter. Oriel Securities' Darren Winder says at current levels UK equities are undervalued. Even allowing for the risk of further downward revision to 2012 and 2013 earnings estimates, he expects the Footsie to breach 6,000 before the end of the year and rise further in 2013.
Mining stocks featured as metal prices continued to reflect improved eurozone sentiment. Gold touched 1,794.82, its best level since mid-November last year, as the precious metal continued to be an attractive hedge against inflation. Eurasian Natural Resources led the charge with a gain of 18.6p to 333.3p, while Kazakhmys rose 31.5p to 738p and Vedanta Resources 36p to 1101p.
Hedge fund giant Man Group put on 4.5p to 90p after broker Nplus1 Singer advised clients to buy ahead of the third-quarter trading update on October 18. Tesco cheapened 2.8p to 315.35p. Broker Seymour Pierce slashed its 2013 and 2014 earnings forecasts by 8pc and 14pc respectively in the wake of Wednesday's disappointing interims. Analyst Kate Calvert warns that with no visibility on where UK profitability will bottom and too many of its overseas businesses face trading issues in the shorter term she retains her 'reduce' recommendation and cuts her target price to 290p from 310p.
Premier Foods reflected recovery hopes at 74.75p, up 8.5p. Analysts generally applauded the appointment this week of former Uniq boss Geoff Eaton as chief operating officer.
Sellers pushed WS Atkins down 34p to 695p after a Press report highlighted the engineer and design consultancy services group's involvement in the high profile West Coast refranchising fiasco. It acted as technical advisor to the Department for Transport.
Broker Panmure Gordon says Atkins has a strong rail expertise and can be expected to play an active role in a strategically important infrastructure sector over the medium term. Its target price is pounds sterling 8.
Telecom Plus rang up a gain of 20p to 892p after the board reported that first-half profits and earnings per share are expected to be 'firmly' ahead of last year and promised shareholders a significant increase in the interim dividend.
Broadband and communications provider KCOM, on the other hand, lost 5.6p to 78.75p following a cautious trading statement. Trading is 'in line with expectations', but orders in its enterprise division have been below expectations. First-half net debt has to pounds sterling 75m as a result of share scheme purchases and planned increases in capital expenditure.
Processing group Pursuit Dynamics' shares crashed 2.05p, or 25pc, to 6.08p after management said it is continuing to explore financing options and expects to be able to provide an update on its discussions by the end of the month.
Rumours were rife that it has been trying to raise cash at a heavily discounted 3.5p a share, but has so far found no takers. That's no surprise as long-suffering investors supported a rights issue at pounds sterling 1 last December and have watched the shares disappear down the toilet ever since. It was not that long ago they were changing hands above pounds sterling 7.
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